I was in the health club, going as fast as I could on a cross country skiing elliptical machine. Twenty inches in front of my eyes was a TV tuned into a financial channel.
In the background were streaming quotes from the Dow Jones stocks and in the right corner there was a highlighted box showing the DJI, SP and NADQ averages. Intermittently, in the same box, the price of gold, silver and Euro/Dollar rates would flash on the screen.
I knew that Ben Bernanke would speak. He would tell the world what the Fed was planning. He came on the screen and I felt myself skiing faster.
GOLD PRICE 1/25/2012
Ben Bernanke is a very pleasant looking man, with a well tailored beard, soft brown eyes and a soft voice. He was always exceedingly polite.
Who would know that he worked for the Gestapo? Who would know that he could throw the entire world into a panic by simply changing the interest rates? The Gold Buyers would know.
Ben started out his discourse by telling the people of the world who understand English, that economically, things in the USA were not that bad, but, also, not that good.
He rambled on, telling his enraptured listeners that unemployment was getting better, but very slowly, and that housing was not improving, but that was normal, and that Europe may or may not have a few problems.
In conclusion, he said, “The world economy is slowing down.” Everyone knew that! What about the interest rates? “So we wont raise the interest rates for the next three years!”
The price of gold in the little box on the right side of the screen started to move upwards. It had started at ten dollars below yesterday’s close. It started out at $1655 per ounce and ended the day at $1708.
AFTER THE SPEECH
After the speech, the reporters threw the questions at Bernanke. “What about Europe? Will you bail out Europe?”
“Oh no,” said Bernanke. “We have nothing to do with Europe.” The gold buyers remembered how the European banks had been given hundreds of billions of dollars at the “back door window.”
“What about inflation and jobs? Which is more important?” “They’re equally important,” Bernanke said soothingly. “If something happens, we will take care of it.”
The gold buyers thought to themselves: if unemployment goes up, there will be another injection of a trillion dollars into the financial system. Ben is clearly not worried about inflation.
During the Great Depression of the 1930’s, the problem was Deflation, not Inflation.
Ben Bernanke had studied the Great Depression thoroughly when he was in college. He believes that the only way that the Great Depression could have been avoided would have been through fiscal stimulus, even if it meant inflation.
All gold buyers are aware of these beliefs.
Ben Bernanke was asked one final question:
“Would the Fed give money to the IMF to help Europe?” “That is not for me to say,” said Bernanke, disarmingly. “The Congress and the President have to decide that. But, of course, we will do whatever they wish.”
Translation: “Of course we will throw a trillion into the IMF. European banks and American banks are brothers. We helped them before, we will help them again.”
The gold buyers thought: “The European Central Bank gave the European banks a trillion Euros at one percent interest for three years. Now the Fed will add another trillion.”
The evidence is difficult to erase. The ECB gives European banks as much money as they want for three years at one percent. The Fed says to American banks: As much money as you want at low interest rates for three years.
Across the world, gold buyers get the message: “At the end of three years, what will you buy with a Dollar or a Euro?”